D'Pergo Custom Guitars Inc. v. Sweetwater Sound Inc.

United States District Court, D. New Hampshire

August 20, 2018

D'Pergo Custom Guitars, Inc.v.Sweetwater Sound, Inc.

ORDER

LANDYA
McCAFFERTY UNITED STATES DISTRICT JUDGE.

Before
the court are three pending motions. First, plaintiff
D'Pergo Custom Guitars, Inc. (“D'Pergo”)
moves to amend its complaint to add two claims based on its
registered trademark. Second, defendant Sweetwater Sound,
Inc. (“Sweetwater”) moves for judgment on the
original pleadings, on the narrow ground that D'Pergo is
not entitled to statutory damages or attorney's fees on
its claim for copyright infringement. Third, Sweetwater moves
for judicial notice of certain facts for purposes of its
objection to D'Pergo's motion to amend. On August 17,
2018, the court held a status conference via telephone. For
the following reasons, D'Pergo's motion to amend the
complaint is granted in part; Sweetwater's motion for
judgment on the pleadings is denied as moot; and
Sweetwater's motion for judicial notice is denied as
moot.

BACKGROUND

The
following facts are taken from D'Pergo's original
complaint, unless otherwise noted. D'Pergo manufactures
and sells custom guitars. In 2003, D'Pergo created a
photograph showing a No. of its unique guitar necks, which it
then published on its website. Sweetwater is a retailer that
sells musical instruments, including guitars, through its
website. D'Pergo alleges that Sweetwater obtained the
photograph and published it on Sweetwater's own website.
Specifically, Sweetwater posted the photograph in its online
“Electric Guitar Buying Guide, ” a printout of
which D'Pergo has attached to both its original and
proposed amended complaints. See doc. no. 1 at
18-24; doc. no. 27-4. D'Pergo brought this
action in December 2017, initially raising a claim for
copyright infringement (Count I), an unfair competition claim
under the New Hampshire Consumer Protection Act
(“CPA”) (Count II), and a deceptive business
practices claim under the CPA (Count III).

DISCUSSION

The
court begins by examining D'Pergo's motion to amend.
D'Pergo moves to amend its complaint to add two new
claims and factual allegations related to those claims.
Proposed Count IV is for false designation of origin and
unfair competition (15 U.S.C. § 1125(a)(1)), and
proposed Count V is for trademark infringement (15 U.S.C.
§ 1114(1)(a)). These claims relate to Sweetwater's
alleged infringement of D'Pergo's federally
registered trademark, which is a distinctive design for its
guitar necks:

(Image
Omitted)

Doc.
nos. 27-5 at 2, 27-6 at 2 (resized from originals). For both
claims, D'Pergo alleges that Sweetwater's display of
D'Pergo's trademark in the photograph is likely to
cause confusion and mislead consumers into believing that
Sweetwater's goods are affiliated or connected with
D'Pergo.

Under
Rule 15(a) of the Federal Rules of Civil Procedure, a party
may generally amend its pleading “only with the
opposing party's written consent or the court's
leave, ” which should be “freely give[n] . . .
when justice so requires.” Fed. R. Civ. P.
15(a)(2). Nevertheless, “a district court may deny
leave to amend when the request is characterized by undue
delay, bad faith, futility, or the absence of due diligence
on the movant's part.” Sykes v. RBS Citizens,
N.A., 2 F.Supp. 3d 128, 133 (D.N.H. 2014).

“A
proposed amendment to a complaint is futile if, as amended,
the complaint . . . fails to state a claim.”
Id. (internal quotation marks omitted).
“Therefore, review for futility is identical to review
under Federal Rule of Civil Procedure 12(b)(6),
” id., whereby the court accepts the factual
allegations in the complaint as true, construes reasonable
inferences in the plaintiff's favor, and
“determine[s] whether the factual allegations in the
plaintiff's complaint set forth a plausible claim upon
which relief may be granted, ” Foley v. Wells Fargo
Bank, N.A.,772 F.3d 63, 71 (1st Cir. 2014) (internal
quotation marks omitted). A claim is facially plausible
“when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Ashcroft v.
Iqbal,556 U.S. 662, 678 (2009).

Sweetwater
makes six arguments in objecting to D'Pergo's motion
to amend. First, it contends that any claim based on
D'Pergo's trademark is futile because D'Pergo
alleges that in 2006, it stopped using the photograph on its
website. In Sweetwater's view, this allegation
establishes that D'Pergo abandoned its trademark. But as
D'Pergo points out, there is a distinction between
D'Pergo's continued use of the photograph, and
D'Pergo's continued use of its trademark. It is the
latter that is relevant for purposes of assessing
abandonment. See 3McCarthy on Trademarks &
Unfair Competition § 17:9 (5th ed.) (“[L]ack
of actual usage of a symbol as a ‘trademark' can
result in a loss of legal rights. This loss is known as
‘abandonment.'” (emphasis added)). Because
the complaint does not establish that D'Pergo abandoned
its trademark in that sense, Sweetwater's argument fails.
And regardless, abandonment presents a question of fact that
the court cannot resolve at this juncture. See Crash
Dummy Movie, LLC v. Mattel, Inc., 601 F.3d 1387, 1390
(Fed. Cir. 2010).

Second,
Sweetwater claims that it removed the photograph from its
Buying Guide on January 6, 2016, months prior to the date of
registration for D'Pergo's trademark (August 23,
2016). This fact is derived not from the complaint, however,
but from a declaration that Sweetwater has submitted with its
objection. Because the court may not consider that fact in
evaluating the futility of D'Pergo's motion, and must
instead confine its analysis to the complaint,
Sweetwater's argument fails.[1] See Foley, 772 F.3d
at 71. By the same token, the court may not consider
Sweetwater's claim that it had no actual or constructive
notice of D'Pergo's trademark application or
registration while the photograph was posted in its Buying
Guide.

Third,
Sweetwater alleges that D'Pergo “committed a fraud
on the USPTO” because D'Pergo averred in its
trademark application that it sold necks for electric
guitars, when in fact it does not. Doc. no. 30-1 at
9. For this argument, it suffices to say that an allegation
of fraudulent misrepresentation presents questions of fact
that the court cannot resolve in Sweetwater's favor at
this time. See generally MPC Franchise, LLC v.
Tarntino,826 F.3d 653 (2d Cir. 2016) (discussing
standard for claim that trademark registration was procured
through fraud).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fourth,
Sweetwater asserts that its &ldquo;functional and/or
aesthetic use&rdquo; of the photograph in its Buying Guide
cannot support a claim for trademark infringement or unfair
competition. Doc. no. 30-1 at 13. To be sure,
D&#39;Pergo&#39;s theories of liability based on
Sweetwater&#39;s use of the photograph may present unique
issues not present in more prototypical cases of trademark
infringement or unfair competition, and such issues may
become the subject of subsequent motion practice. But both
parties present their arguments in brief fashion, largely
bereft of relevant case law. The court is not in a position
to resolve the nuanced questions alluded to, but not fully
developed, by Sweetwater, and therefore declines to address
this argument at present. See United States v.
Zannino,895 F.2d 1, 17 (1st ...

Our website includes the first part of the main text of the court's opinion.
To read the entire case, you must purchase the decision for download. With purchase,
you also receive any available docket numbers, case citations or footnotes, dissents
and concurrences that accompany the decision.
Docket numbers and/or citations allow you to research a case further or to use a case in a
legal proceeding. Footnotes (if any) include details of the court's decision. If the document contains a simple affirmation or denial without discussion,
there may not be additional text.

Buy This Entire Record For
$7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.